Monday, February 26

Credit Suisse sees drops in BBVA and Caixabank shares on the Ibex 35

Credit Suisse bets on remain neutral in the three large Spanish banking entities, Banco Santander, BBVA and Caixabank, that is, your bet is to stay in value without taking more positions, buying or selling.

The analysts of the Swiss entity opt for Banco Santander versus BBVA among the possible candidates to acquire Citi’s consumer and SME business in Mexico that has been put up for sale. Credit Suisse believes that BBVA could incur regulatory risks because with the operation it would achieve a combined market share between BBVA Bancomer and Citi of 34% in loans, much higher than that of the rest of the sector in the country.

In the case of Santander, it would reach a market share of 23%, approaching what BBVA already controls. However, they also maintain that Banco Santander’s capital levels limit its ability to undertake possible mergers and acquisitions in Mexico: a possible purchase of Citi Banamex would represent a disbursement of 4,000 million dollars -3,500 million euros- for which “it would require a capital increase”.

Potential of 5.7% in Santander

The Swiss entity remains ‘neutral’ in Banco Santander with a target price of 3.30 euros per share, which represents a potential from its current prices of 5.77%.

From Credit Suisse they explain that the entity of Cantabrian origin releases provisions and this materializes in profits in the fourth quarter of 2021, they also increase their estimates for 2022 and 2023 by 1% as a result of the increase in the yield of the bonds.

“We continue to see the diversified business model of Santander in geographies and product lines as a key lever for growth and we welcome management’s encouragement of provision rewrites, improved profitability and higher profitability targets, particularly in Spain, Mexico and the United States.”

However, they point out that in Brazil they see “high inflation rates and strong interest rate increases that can potentially hamper loan growth, and a relatively high level of political uncertainty around the upcoming elections translating into a large interest premium. risk putting pressure on the Brazilian real”.

“We expect fourth quarter results to provide more visibility into 2022”, they explain. The entity chaired by Ana Botín aims to maintain its ratio fully loaded between 11.5% and 12%. Ratio that at the end of September stood at 11.85%.

Falls for BBVA and Caixabank

Credit Suisse analysts remain neutral on BBVA shares and place the target price at 5.20 euros per share, which represents a potential fall of 9.56%. “Before the fourth quarter we cut our revenue estimate for 2021 by 3% due to the increase in costs derived from the rise in inflation and the deterioration of the economic forecasts in Turkey,” they indicate.

“We continue to appreciate BBVA’s capital position. However, we see some uncertainty around potential capital headwinds not outlined in the strategic plan. We see the bank’s new target of 14% RoTE, continued cost reduction efforts in Spain, a normalization in the cost of risk and a more favorable outlook in Mexico. However, we are cautious about the bank’s increased exposure to Turkish currency volatility and a less supportive rate environment.

The possible purchase of 50.15% of Garanti’s shares for 2,249 million, with a 15% premium, provides “an upside risk to our estimated share price.”

In the case of Caixabank they also remain neutral and see falls in their shares on the Ibex 35 of 5.79% by placing the target price at 2.60 euros per share. “Prior to the fourth quarter we made a small cut in our 2021 earnings estimate of 1% as we booked lower-than-expected fee income, higher costs due to rising inflation, and higher-than-expected provisions. “, they value.

“We remain cautious regarding the outlook for Caixabank’s interest income, as we expect moderate lending volumes in Spain and excess liquidity costs. We maintain a constructive vision thanks to the bank’s diversification in its insurance business.”